In fact, Corning recently announced plans to develop a separate company division for Gorilla Glass, which now has more than 20 percent of the phone market-with over 200 million devices sold. This can be risky in the short term, but staying the course can pay off. These product lines require large investments during their long research and development (R&D) cycles and for plant and equipment once they go into production. The company was also the inventor of optical fiber and cable for the telecommunications industry. It is a leading supplier of Gorilla Glass, a special type of glass used for the screens of mobile devices, including the iPhone, the iPad, and devices powered by Google’s Android operating system. The company, once known to consumers mostly for kitchen products such as Corelle dinnerware and Pyrex heat-resistant glass cookware, is today a technology company that manufactures specialized glass and ceramic products. At Corning, a company founded more than 160 years ago, management believes in taking the long-term view and not managing for quarterly earnings to satisfy Wall Street’s expectations. This is true regardless of a company’s size or point in its life cycle. They plan and monitor the firm’s cash flows to ensure that cash is available when needed.Įxhibit 6.2 How Cash Flows through a Business (Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license.) Financial managers focus on cash flows, the inflows and outflows of cash. Financial managers use financial statements and other information prepared by accountants to make financial decisions. But the accountant’s main function is to collect and present financial data. In most firms, both areas are the responsibility of the vice president of finance or CFO. The manager will also suggest the most appropriate way to finance the project, raise the funds, and then monitor the project’s implementation and operation.įinancial management is closely related to accounting. Over a longer time horizon, the manager will thoroughly study whether and when the company should open a new manufacturing facility. Then they choose the best sources to obtain the required funding.įor example, a financial manager will track day-to-day operational data such as cash collections and disbursements to ensure that the company has enough cash to meet its obligations. They work with the firm’s other department managers to determine how available funds will be used and how much money is needed. Financial managers must track how money is flowing into and out of the firm (see (Figure)). But money from sales doesn’t always come in when it’s needed to pay the bills. Revenues from sales of the firm’s products should be the chief source of funding. The head of the IT department will need to justify any requests for new computer systems or employee laptops. If you are a sales representative, for example, the company’s credit and collection policies will affect your ability to make sales. Managers in all departments must work closely with financial personnel. All business decisions have financial consequences. It may not be as visible as marketing or production, but management of a firm’s finances is just as much a key to the firm’s success.įinancial management-the art and science of managing a firm’s money so that it can meet its goals-is not just the responsibility of the finance department. Therefore, finance is critical to the success of all companies. To make money, it must first spend money-on inventory and supplies, equipment and facilities, and employee wages and salaries. How do finance and the financial manager affect the firm’s overall strategy?Īny company, whether it’s a small-town bakery or General Motors, needs money to operate.
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